07 January 2011

Managing the gift exchange side

Gifts differ from trades in that a trade never generates a stock whereas a gift always does. The trade liquidates the stock on the spot by eliminating any debt that needs later to be redeemed. Gifts always create debts so gifts are always transacted in through the management of asset accounts rather than through price movements. 
The land is a stock, the harvest is a flow, and the surplus is a stock that enables the sabbatical year consumption out of stocks rather than out of flows. Gift exchange economies can approximate market economies by liquidating the debt quickly. The more quickly the debt is liquidated, the more closely a gift exchange resembles a market exchange. The air we breathe is continually being replenished by the vegetable kingdom so breathing doesn't register as liquidation unless the carbon load on the atmosphere exceeds the vegetable kingdom's capacity to purify it. So long as the exchange of gifts is stable, that is, so long as the reciprocation or the tradition of gifts maintains as fairly constant the stock of obligation, the employment of free gifts does not imply the liquidation of the system. The covenantal partners honor each other and there is no parasitic behavior to speak of. 
The role of government is to manage the gift exchange side of the economic system, and to draw a line between market exchange institutions and gift exchange institutions. When governments abdicate on their duties to maintain the distinction between gift exchange and market exchange it gives autocratic regimes an incentive to devise economic policies that in a parasitic way feed off of abundance in the market economies. 
When market economies fail to protect their gift exchange systems it results in an increase in strongman rule. The unwillingness of rich societies to demand the honoring of their gift exchanges corresponds to an increase in the incidence of regimes who would exploit the gift exchanges by predating and taking rather than reciprocating or traditing.   

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